DAVID ALEXANDER

Perhaps the greatest social paradox of our age is that with the bank base rate lower than at any time in either the 20th or 21st centuries, owner-occupation has never been less affordable for first-time buyers.

Two weeks ago this column focused on affordability of rental accommodation among people in the 22 to 29 age group; no sooner had the ink dried than the Institute for Fiscal Studies (IFS) think tank pitched in with a gloomy survey showing how the dream of home ownership is slipping away from 25 to 34-year-olds.

According to the IFS, in 2016 approximately 40 per cent of people within this category would not be able to buy one of the cheapest homes in their area even if they managed to save a 10 per cent deposit, whereas two decades years earlier, over 90 per cent with a similar down payment would have been able to purchase a house in their area if they borrowed four-and-a-half times their salary.

The big difficulty faced by first-time buyers – managing to raise that 10 per cent deposit – is most acute in London and south-east England, says the IFS, whereas stable or falling house prices “have meant that raising a deposit has become slightly easier in most of the UK”. This is an interesting point which, when it comes to Scotland, is half-right, half-wrong.

Yes, there are parts of Scotland where house prices have remained static for several years and, in some cases, actually fallen, normally in the smaller provincial towns which have suffered local redundancies. Yet no one could claim, for example, that average prices in Edinburgh, East Lothian, Glasgow’s West End, Bearsden/Milngavie or Newton Mearns are cheaper than they were 11 years ago.

Yet, finding a deposit is not the only problem facing first-time buyers. Even in London, where earnings are higher than anywhere else in the country, the level of wage appreciation is not keeping up with the rise in house prices. Increases in real inflation-adjusted incomes of 25 to 34-year-olds over the period covered by the IFS survey is only 19 per cent. I suspect that the incomes of those in the market for homes in our Scottish “hot spots” have risen by more – but even that may be falling behind the rise in prices in those areas.

So what, if anything, can be done? The IFS believes a stamp duty regime with concessions for first-time buyers might help, something I would go along with. However, this should be part of a wider restructuring of LBTT, as stamp duty is now known in Scotland. The IFS conclusion that stamp duty rates are discouraging higher-end and even some middle-market owners from selling is a problem that could be even more troubling in Scotland given the current rates of LBTT.

To be fair to the Scottish Government, “entry levels” of LBTT in Scotland are much more advantageous to first-time buyers than in England and Wales, but rates higher up the scale are unhelpful to the market as a whole, especially to those who have managed to get a foot on the housing ladder and want to progress to the next stage.

And given the immigration-fuelled rise in population (and a demand for “back and front door” accommodation), if housing generally is to become more affordable then we need to build more houses. Wherever possible, these should be in places where people want to be: usually a nice setting, close to local services, and convenient for work. Green belts have been invaluable in preventing uncontrolled urban sprawl but politicians and planners need to get real to the demographic situation. Preventing the physical expansion of a city or town with good, growing employment opportunities inevitably leads to more satellite communities, which in turn means longer commuting journeys for work – often by car.

And by implication, more greenfield sites (not all of which is “scenic”) released for housing should lead to cheaper land prices – perhaps the best way of all of helping first-time buyers.